Although the Australian economy has produced over 300,000 jobs in the last twelve months, the employment rate has struggled to approach 5%. A combination of population growth and a rising participation rate explains the apparent unresponsiveness of the jobless rate in the face of an expanding employment market.
The ABS has released employment estimates for August which indicate the total number of people employed in Australia in either full-time or part-time work increased by 44,000. The report also revised previous estimates from June and July; June’s employment growth number was revised up from +58,200 to +60,700 and employment growth during July was revised down from -3,900 to -4,300.
Market expectations prior to the report’s release were for 18,000 new positions to be created and financial markets reacted by sending local bond yields and the Aussie dollar higher. 3-year ACGB yields finished the day 3bps higher at 2.06% while 10-year and 20-year yields each increased by 2bps to 2.61% and 2.94% respectively. The Aussie dollar initially jumped by about 0.20 US cents to 72.00 US cents before it dropped back down during afternoon trading.
Cash markets were largely unchanged after the figures came out. The implied probability of a rate increase in any given month prior to the RBA’s May 2019 meeting is essentially zero while the chances of rate increases at August’s meeting slipped from 22% to 16%.